Russia meets grain traders, sees no need to limit exports

Russian grain market is stable, agriculture ministry says

Bulk wheat being loaded on a ship in a Russian port. (YGrek/iStock/Getty Images)

Moscow | Reuters — Russia’s agriculture ministry does not see a need to impose an export duty on grains or to curb grain exports in any other way, it said in a statement after a meeting with exporters on Monday.

Chicago wheat prices — a global benchmark for grains — were supported last week by speculation that Russia, one of the world’s largest wheat exporters, might move to limit wheat exports later in the season due to a lower crop.

“The (Russian) grain market is stable now,” the ministry said in its statement. The ministry also said it did not see any factors which would lead to growth in the pace of Russia’s exports or change the supply-demand balance significantly.

Russia’s 2018 wheat crop is forecast to decline from a record 85 million tonnes in 2017. It will still be a large crop compared with the average of the last five years but traders have said there was pressure for some form of grain export restraint from regions hit by dry weather in August.

Two traders said the mood of the meeting at the agriculture ministry was calm and showed that the ministry was less nervous about Russia’s lower crop and high grain exports. “The mood is changing,” said one of the traders as he compared the ministry’s current attitude towards grain exports with the one at their previous meeting in August.

After the August meeting traders said Russia could consider export curbs once grain exports reach 30 million tonnes, including 25 million tonnes of wheat, in the 2018-19 marketing season that began on July 1. The ministry has denied export limits were discussed.

Russia’s grain exports rose in August due to a weakening in the ruble, growth in global prices and the early arrival of the new crop.

After Monday’s meeting, the ministry also said it was considering selling 1.5 million tonnes of grain this season in addition to the previously approved 500,000 tonnes from its 3.5-million stockpiles. As of Aug. 31, Russia held 3.5 million tonnes of grain in stockpiles.

SovEcon agriculture consultancy expects Russia’s 2018/19 wheat exports to reach 25 million tonnes in January-March, probably in January. Some traders said previously exports would speed up in coming months as traders bet on restrictions in some form sometime after December.

Options for how things may unfold later in the season could follow the pattern of previous seasons, which vary from no restrictions at all to unexpected informal curbs on grain exports and revival of a wheat export tax, currently set at a zero level, SovEcon said.

A possible revival of the wheat export tax could reduce SovEcon’s forecast for Russia’s 2018-19 wheat exports by four million to seven million tonnes from the current 33.9 million tonnes, it SovEcon said.